Ahead of the Curve

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KLP U-turns on Dakota pipeline firms after UN slams project

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Norwegian municipal pension fund KLP is to dump more than half a billion kroner of investments in companies behind the controversial Dakota Access Pipeline after a UN envoy criticised handling of the project.

The move is despite the NOK589bn (€64.4bn) pension fund earlier this month defending its decision to remain invested in the pipeline companies even while other institutions had offloaded the exposure. After sending a staff member to the US to assess the situation, KLP last week said it had not been able to document serious or systematic violations of environmental or human rights in the matter, evidence it needed in order to justify removing a firm from its portfolio.

KLP said it had subsequently decided to exclude the firms Energy Transfer Partners (ETP), Phillips 66, Enbridge, and Marathon Petroleum Corporation from its investments because of an “unacceptable risk” of contributing to human rights violations.

The decision was made, it said, in the light of most recent developments around the pipeline. On 3 March, the UN special rapporteur on the rights of indigenous peoples, Victoria Tauli-Corpuz, said the tribes affected by the project had not been consulted sufficiently.

She also said she was “deeply concerned” by US president Donald Trump’s executive order on 24 January giving the project the go-ahead without a broader environmental impact statement.

Annie Bersagel, acting head of responsible investments at KLP’s asset management arm, KLP Kapitalforvaltning, said: “In making the decision to divest, KLP places significant emphasis on the UN Special Rapporteur’s assessment, a previous recommendation on exclusion from the Council on Ethics for the Government Pension Fund Global, as well as the lack of progress through active ownership.”

It had been a difficult case, she added.

KLP noted in its analysis underpinning the decision that it was “unnecessary to consider whether a state has violated human rights in order to conclude that a company faces an unacceptable risk of contributing to a human rights violation, so long as the conduct in question falls below the minimum standards outlined in international human rights instruments”.

KLP will now divest roughly NOK578bn of investments, including around NOK56m of fixed income investments in ETP; some NOK190m in Phillips 66 in equity and fixed income; about NOK273m of equity and fixed income issued by Enbridge and Spectra Energy – a company recently acquired by Enbridge – and around NOK59m in Marathon Petroleum, also in both equity and fixed income.